Cryptocurrency ETF May Become A Reality In Japan

The permission of a Bonafide Bitcoin Exchange Traded Fund (ETF) in the US–one of the world’s largest crypto-industry markets–has long been a grandiose dream for cryptosphere optimists.

The US Securities and Exchange Commission (SEC) have long been opposed to the approval of such a major financial asset because the organisation believes that cryptocurrencies are too nascent to endorse such an offer (insufficient volume, manipulation fears, and minimal oversight).

In this case, the body has pushed back decisions on cryptocentric ETF inquiries or rejected applications time and time again. Even a proposal from the Winklevoss Twins and their-highly regarded, fully regulated crypto startup, Gemini, was turned down, signaling that the SEC is very selective when it comes to such an emerging investment vehicle. However, the Japanese Financial Services Agency (FSA) may examine the approval of Bitcoin ETF initiatives in a recent article by Bloomberg, which quoted those acquainted with the subject.

Anonymous sources asserted that the SEC equivalent of the Asian country had “abandoned plans” to permit crypto-linked derivatives, such as physically backed futures (Bakkt), to be traded in Japan, but rather looked at ETFs. The FSA’s deferment of permitting derivatives can be regarded as dovish, especially in view of the alleged power in physically backed Bitcoin futures and similar non-paper assets.

However, some skeptics contend that this regulatory action could be a positive development for this sector, as tin-foiled haters assume that paper futures, such as those based primarily on CME and CBOE, actually flattened Bitcoin’s value rather than increasing it. In addition, given the hype around a full-fledged crypto ETF, the apparent change in tactics of the FSA could ultimately turn out to be positive for this budding ecosystem.

Sources suggest that the relevant Japanese agency is presently doing its level best to “gauge industry interest” in Bitcoin ETFs, as it tries to offer investors an option to the above-described derivatives, which could create speculative conditions and hardly any use.

Bloomberg’s inside people added that if ETFs are formalised as the right way to go down, the Liberal Democratic Party will nudge a government bill by March, which implies that the legislation could enter into force by 2020. The current theoretical bill is supposed to rewrite Japan’s securities law and the Payment Services Act, which has become a topic of debate to cryptoenthusiasts in the country.

While the chances for Bitcoin ETFs based in Japan may be substantially better, VanEck, a staunch supporter of the crypto industry, has still steered for permission across the pond. As reported earlier, an official SEC memorandum dated 28 November 2018 divulged that representatives of VanEck, SolidX and CBOE debated the Bitcoin issue in a closed door meeting.

In this meeting, VanEck representatives unveiled a powerpoint presentation of 62 segments, which dissected its ETF application to its core, along with the present state of the cryptocurrency market. When discussing the latter, the board revealed that, like conventional commodity markets, the value of BTC is “tightly linked” on the spot and futures markets, evidently demonstrating that Bitcoin is a “well-functioning capital market.”

However, after some careful consideration on the meeting, the SEC delayed its remark on the application once more. In a policy document published by the SEC on 6 January, the government agency asserted that it would exercise its right to postpone a judgment on the request until 27 February 2019. While this new regulatory judgment was considered bearish by gullible traders, many strategists and commentators argued that the pause was expected, expressing concerns that the underlying crypto market is not completely ready for such an investment vehicle to arrive.

However, thousands of people are still anxiously waiting for the arrival of the US-based, regulated, physically-backed, retail-affordable Bitcoin ETF, which could trigger widespread adoption. But that’s just a hope at this point.